Share this page

Summary

This page offers an overview of why we are interested in broadband provision as a means of encouraging local economic growth and offers insight on what does and doesn’t work in this policy area.

Effects are not always positive, are not necessarily large, and may depend on complementary investments by firms. Service industries and skilled workers may benefit more than manufacturing industries and unskilled workers.

It summarises some of the evidence we already have on what works when delivering these types of programmes, provides guidance on what we know about the effectiveness of different ‘design features’, and offers some thoughts on improving evaluation as well as some case study examples. Throughout the page you’ll find links to further resources including a more detailed discussion of
why we look at broadband, our full evidence review and toolkits, as well as evaluation resources.

What do we mean by Broadband and how can it deliver local economic growth?

‘Broadband’ is a generic term to describe always-on access to an internet service.

While Broadband and information and communications technologies can have wide ranging impacts, we are particularly interested in their impact on the local economy via their effect on productivity, employment and wages.

Governments may support Broadband provision because:

It could increase firm and worker efficiency by lowering costs and enabling innovation.

It may improve productivity, leading to higher wages and employment.

Connectivity allows for flexible working and may increase labour market participation.

It may lower barriers to starting a business.

Broadband provision is largely market-led, but the public sector may intervene in a number of ways, for example:

By subsidising connections to existing networks through voucher schemes and loans, particularly where there is a market failure – such as in rural areas.

What does the evidence on Broadband show?

Extending broadband to an area can affect firm productivity, number of businesses, and local labour market outcomes (such as employment, income and wages).

These effects are not always positive, are not necessarily large, and may depend on complementary investments by firms (for example, training workers, or reorganizing sales strategy or supply chains to take advantage of faster internet connections).

The effects of broadband provision can vary across different types of industries and workers with service industries and skilled workers possibly benefiting more than manufacturing industries and unskilled workers.

The economic effects of broadband tend to be larger in urban areas (or close to urban areas) than in rural areas.

What policymakers need to know when designing Broadband programmes

Broadband, like many ICTs, is a ‘disruptive’ technology that creates winners and losers, and is not a silver bullet for local economic development. There is evidence that broadband has positive local economic impacts, but some of these may be due to in-migration. In particular it seems to benefit higher skilled workers over low or unskilled workers.

The effects of adoption and provision may differ. More work needs to be done to understand whether and how to encourage adoption and productive business use.

Rural areas may need to subsidise broadband provision but the economic benefits of doing so will not be as large as for urban areas.

This evidence is discussed in our evidence review, with additional evidence on particular aspects of programme design summarised in our toolkits: